St. Paul Travelers Denies Merger Discussions with Zurich

March 19, 2006

Saint Paul, Minn.-based The St. Paul Travelers Companies Inc. announced on Sunday that recent media reports, including a Wall Street Journal article that claimed the company was in discussions with Zurich Financial Services Group regarding the possibility of a merger with Zurich, are not true.

St. Paul Travelers also stated that while its policy is “to avoid any comment on, or response to, market rumors or speculation, the factual and definitive manner in which these reports were made, both nationally and internationally, has prompted the company to provide this clarification.”

Shares of Swiss insurance company Zurich Financial Services rose sharply Friday following the report by the Wall Street Journal that the U.S. company St. Paul Travelers was in the early stages of negotiating a takeover bid. Shares of Zurich Financial rose 5 percent to close at 316.75 Swiss francs ($237.81) after rising as much as 11 percent at the opening Friday in Zurich.

St. Paul Travelers shares slipped $1.41, or 3.2 percent, to close at $41.55 on the New York Stock Exchange.

While insurers around the globe have been seeking to expand from regional into global concerns, analysts cautioned that a potential deal still faces many hurdles, not the least of these being possible opposition by Zurich Financial’s management.

Some analysts said they believe, however, that a combined company could improve cost efficiency and spread insurance risk.

“The positive rationale behind a deal would be the potential to cut more costs,” Rene Locher of Kepler Equities in Zurich told The Associated Press.

Georg Marti of Zuercher Kantonalbank said he doubted that St. Paul would buy Zurich Financial, but that a merger of equals was a possibility.

St. Paul Travelers itself was created in a 2004 merger of St. Paul Cos. Inc. and the Hartford, Conn.-based Travelers Property Casualty Corp.

Some Associated Press reporting was used in this story.

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